There’s been news trending on Netflix investing it’s technology & financial assets to dig into the video games.
If this idea is worth pursing or avoiding remains widely debated.
According to CNBC, the streaming service plans to add gaming as part of its media ecosystem. This is in response to 400,000 subscribers lost from Q2 of 2021 as part of an increasingly competitive industry. With games, the company hopes to keep users engaged with the app longer. This is to encourage more content consumption on their platform vs going on others.
Netflix is in pursuit of strengthening customer relationships, increasing subscriber growth, & user retention. In a data-driven economy, there’s hurdles to unpack when it comes to superseceding the streaming & gaming industries.
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Anyways, we’ll discuss the competition Netflix currently faces in streaming, in video games, in technology, & insights from this innovative case study.
Here’s a podcast clip from Valuetainment discussing the company’s move from diverse business perspectives. This visual dissemination gets into the potential for success or failures of the gaming strategy.
Continue reading the blog for a look at specific market data, the tech used, & implications for consumers & companies.
Netflix is already in steep competition with streaming entertainment content with Disney Plus, HBO Max, Amazon TV, Hulu, YouTube, Peacock, Paramount Plus, & others. According to Grand View Research, the market size in USD for video streaming was 50.11 billion in 2020, & projected to hit 59 billion by the end of 2021.
There is also increasing speculation there will be an annual growth rate of 21% a year in total market revenue increasing.
Competition has been so fierce in monthly entertainment subscriptions that market share can be easily lost or gained. One report from Statista claims Netflix has 53% market share as of July 7th, 2021.
Netflix deserves so much kudos because they were one of the first to adopt entertainment subscriptions & set an industry standard for others to follow.
They’ve developed algorithms in its streaming service to recommend content users are most likely to watch based on user history. As stated before, they revolutionize subscription business models & entertainment services.
The question is if they can replicate similar success to the gaming culture as well.
It’s been stated by Gameranx, that they’ll be heading into mobile games first. This puts Netflix in direct competition with Apple & Google since their phones have plenty of free games to play on phones.
It would seem evident that games would be played on the Netflix app rather than having to go to the app stores on the respective phone companies.
Whether this puts Netflix in a fishy position with Apple & Google would be interesting if users play games on Netflix vs within the phones ecosystem.
Now this pegs a question of if there are in-app purchases to be made on the Netflix app & if the company has to split that with Apple or Google.
Moreover, the last thing Netflix wants is to be the next Fortnite & get kicked off the app store on Apple.
Netflix is a software company at the end of the day. An interesting development for Netflix for future innovation would be if they made their own hardware & users can have easy access to watching Netflix.
Their hardware could compete with consoles & phones if they can manage keeping users on their infrastructure over others.
To compete with behemoths in video game consoles like Microsoft & Sony have to make the costs for Netflix worth the risk. In the event they decide to get their own phones to keep users on can be a repeat of Amazon when they tried to give users phones.
I think investors are hoping Netflix stays in their lane when it comes to growing & doing what they do best. I’m sure the executive team are aware of the potential risks but need a plan of action to continue to grow & increase user retention.
What Netflix does next will define how technology moves forward with entertainment, software & hardware capabilities.
At the end of the day, consumers are getting the better deal out of this if mobile Netflix games become successful & user experiences are enhanced.
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